This morning's jobs report was slightly weak, which initially caused market players to think that the Fed may not be so anxious to raise rates. That thinking didn't last for long. Fed Vice Chairman, Stanley Fischer, called it a "Goldilocks" number, which helped to accelerate the selling that started as soon as the market opened.
The 'bad news is good news' reaction isn't working this time, and that is keeping dip buyers on the sidelines. Breadth is poor, at about 2 to 1 negative, and there are no significant pockets of momentum to be found. Several recent IPOs, such as Camping World (CWH) , Coupa Software (COUP) and Advanced Disposal (ADSW) , are not trading particularly well.
We have bonds, gold and the dollar all indicating that higher interest rates are on the way. The market dealt with that fairly well for a while, but today the mood is turning sour.
The indices are still holding key technical levels, but the support is precarious. We've been saved often when we've been in this position by dovish central bankers, but they are not yet showing signs of softening their recent hawkish bias.
I've taken a number of stops and my cash levels have increased quite a bit in the last few days. I'm not a growling grizzly but I don't see any rush to put capital to work right now. Even the stocks that have been the best lately are seeing profit -taking occur, which makes it a good time to work on my watch list.
A good example of the sort of stock I'll be watching is Energy Recovery (ERII) . It had a great run after a pullback in August and is now pulling back in search of new support. I'll be watching for new entry points to eventually develop.